Interest rates compensate lenders for

forgoing consumption of money loaned

If the profit opportunity for a product increases, the most likely result would be

increase in the number of producers

Which of the following is true about competition in a market economy?

It affects supply and demand schedules

In economics, a shortage of a product occurs when

the product's price falls below its market-clearing level

The principal amount of a loan is BEST described as

the balance used to calculate interest payments

Economists believe prices set by supply and demand are primarily measures of

relatives scarcity of goods or services

What explains why the price of a particular toy might FALL just before December 25th?

Sellers produced a surplus of the toy

Demand and supply schedules are PRIMARILY based on

decisions made by consumers and producers in a market

Which of the following is least likely to involve interest payments?

a bill for cable television service

The market-clearing price is the price at which

quantity supplied equals quantity demanded

Which of these statements about interest rates is TRUE?

Interest rates compensate lenders and not borrowers

An investor who buys a bond

has loaned money to a corporation or government

Which is true about financial products?

CDs usually provide higher return than savings accounts

The market equilibrium price is the price at which

the quantity demanded is the same as the quantity demanded

A mutual fund is best described as

pool of money supplied by people managed by fin. prof.

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ECONOMICS - Ch. 5 & 6

22 termsStudBud Administration45 plays

Questions based on Junior Achievement curriculum for Economics (high school level).

Flashcards22 cardsFPractice quizPHost liveL

Questions 22

Answers

1
Interest rates compensate lenders for
assuming the risk of default on a loan
assuming inflation risks on a loan
forgoing consumption of money loaned
all of the above
2
If the profit opportunity for a product increases, the most likely result would be
increase in the cost of production
increase in aggregate demand
increase in the number of consumers
increase in the number of producers
3
Market-clearing prices are important in free enterprise because they
all of the above
provide information about producer costs and consumers wants
help to ration available goods and services
provide incentives for people to produce goods and services
4
A corporation's stockholders are probably best described as the company's
creditors
debtors
managers
owners
5
Which of the following is true about competition in a market economy?
It affects supply and demand schedules
It reduces efficiency in an economic system
It regulates the public's needs and wants
It changes the demand curve
6
In economics, a shortage of a product occurs when
the people who buy the product consume more than they need
the product's market-clearing level reduces overall demand
the product's price falls below its market-clearing level
the businesses producing the product become less efficient
7
When demand and supply for a product are equal, which of the following is most likely true?
The product is scarce
The product's market clears
All of the above
The product's price will fall
8
The principal amount of a loan is BEST described as
the balance used to calculate interest payments
average payment to pay off a loan in 1 year
original balance borrowed plus all interest payments
sum total of all interest payments made by borrower
9
Economists believe prices set by supply and demand are primarily measures of
amount of volatility in the market
relatives scarcity of goods or services
effects of government subsidies
level of regulation in the eocnomy
10
What explains why the price of a particular toy might FALL just before December 25th?
Buyers caused a shortage of the toy
Sellers produced a surplus of the toy
Sellers failed to produce enough toys to meet demand
Buyers preferred the toy to others on the market
11
Demand and supply schedules are PRIMARILY based on
relative elasticity of most consumer needs and wants
decisions made by consumers and producers in a market
methods of improving business efficiency
government intervention in setting prices
12
Which of the following is least likely to involve interest payments?
a piece of equipment for a factory
a new home
a bill for cable television service
a new automobile
13
The market-clearing price is the price at which
government officials decide to stabilize the market
producers decide to sell their goods in the market
quantity supplied equals quantity demanded
quantity supplied exceeds quantity demanded
14
Which of the following terms describes cost of borrowing other's money
inflation
demand
surplus
interest
15
Where will product shortages or surpluses usually result in immediate and direct price changes?
market economy
none of the above
command economy
traditional economy
16
Bill deposits $1,000 in 2 yr. CD @ 5% compound interest; amount he earns interest on yr. two
$1,050
$1,000
none of the above
$950
17
Which of these statements about interest rates is TRUE?
Interest rates are unaffected by supply & demand
low interest rates encourage people to save
high interest rates make people want to borrow $
Interest rates compensate lenders and not borrowers
18
An investor who buys a bond
is guaranteed a part of the corporation's profits
has partial ownership of a corporation
has loaned money to a corporation or government
is personally liable for corporation's debts
19
In a month, the price of a product rose 20%. This is most likely because of an increase in
consumer demands
short-term supply
worker efficiency
producer outputs
20
Which is true about financial products?
CDs usually provide higher return than savings accounts
common stock is less volatile than CDs
personal checking accounts pay highest interest
money market have lower interest rates than savings accounts
21
The market equilibrium price is the price at which
supluses depress the number of goods supplied
the quantity demanded is the same as the quantity demanded
shortages and surpluses will have no effect on the market
the government will not intervene in the market
22
A mutual fund is best described as
pool of money supplied by people managed by fin. prof.
a pool of surplus tax revenue for government spending
an employee's savings plan established for retirement
a bank account owned by more than one person

ECONOMICS - Ch. 5 & 6 Flashcards | StudBud